Firm Entry, Trade, and Welfare in Zipf's World

We are grateful to Roc Armenter, Jonathan Eaton, Chris House, Amit Khandelwal, Francesc Ortega, Romain Ranciere, David Romer, Matthew Shapiro, Linda Tesar, and seminar participants at the University of Michigan, Trinity College Dublin, International Monetary Fund, University of Houston, Boston University, Vanderbilt University, Tufts University, Tsinghua University, Hong Kong University of Science and Technology, 2009 NBER ITI Spring Meetings, 2009 CEPR ESSIM, and the Philadelphia Area International Trade Workshop for helpful suggestions. Levchenko thanks the National Science Foundation for financial support under grant SES-0921971. The views expressed in this paper are those of the authors and should not be attributed to the International Monetary Fund, its Executive Board, its management, or the National Bureau of Economic Research.